Friday, March 11, 2011

Canada F-35 cost estimate soars 66%: report

SOURCE ADMIN Canada's planned fleet of 65 F-35As will be at least 66% more expensive to buy and operate over a 30-year lifespan than government officials predicted, according to an independent cost analysis.
The report issued by the Parliamentary Budget Office (PBO) on 10 March predicts the Lockheed Martin F-35A will cost Canadian taxpayers US$29.3 billion over 30 years, compared to the $17.3 billion estimate published in October by the Department of National Defence (DND).
Canada's opposition Liberal Party has seized on the F-35 as a key political issue ever since Conservative Party leader and Prime Minister Stephen Harper committed to buy 65 F-35As on 14 July.
Liberal's leaders have complained the DND cost estimates are too low and taxpayers could save money with a competitive bidding process, with the Boeing F/A-18E/F, Eurofighter Typhoon and Saab Gripen among the interested bidders.
Although substantially higher than the DND estimate, the PBO considers the $29.3 billion overall price tag for the F-35 as probably too conservative.
The report is based on several key assumptions, including Lockheed will build 2,478 F-35As, 330 F-35As will be delivered before Canada receives its first aircraft in 2016 and the F-35A's basic empty weight remains 13,318kg (29,361lb).
With all 65 aircraft delivered from 2016 to 2022, the PBO report estimates that the average cost for Canada's F-35As will be $148.5 million in Fiscal 2009 dollars.
The report also forecasts that the DND will spend $8.4 million every year to operate and sustain each F-35A, as well as about $30.4 million per aircraft for an overhaul and upgrade event scheduled 10 years after delivery.
Those numbers add up to a total ownership cost of $450 million per aircraft, or $29.3 billion overall, according to the PBO report.
Those figures are sharply higher than even the most pessimistic forecasts by the US Department of Defense, which plans to buy 2,443 F-35s. Although originally billed as a $30-$45 million fighter, the DOD now estimates the average cost is $91 million.
The PBO report notes that Lockheed officials believe the cost of the F-35 will decline from the $91 million estimate, not increase.
"Unless there is compelling evidence to the contrary, it is difficult to see prices reducing to their original estimated level," the PBO report says.